Laws to Prohibit 'Bulryang Coin'... National Assembly Begins Its Journey [The Swamp of Bulryang Coin]

[Report on 316 Victims of Fraudulent Coins - <3>] Fraudulent Coin Prevention Act Reaches National Assembly
Focus on Preventing Scam Damage... Full-Scale Bill Discussions
Digital Asset Issuer Evaluation Agencies, etc.
User Protection Bill Actively Promoted
Review Scheduled at the July Political Affairs Committee Bill Subcommittee

After the reporting team delivered the "Legislative Inquiry on Preventing Cryptocurrency Fraud and Protecting Users" to the 11 members of the National Assembly's Political Affairs Committee Bill Subcommittee 1, responses were received. Among the 11 members, 6 expressed their positions. Seong Il-jong, Chairman of the People Power Party's Special Committee on Virtual Assets, additionally proposed legislative measures.

[Asia Economy Reporters Chae-eun Koo, Byung-sun Gong] Following Asia Economy's in-depth investigation into victims of cryptocurrency scams in the report titled ‘316 Victims of Fraudulent Coins Report,’ discussions on related legislation have intensified in the National Assembly. In addition to the currently proposed bills?the Democratic Party’s Virtual Asset Industry Act (proposed by Lee Yong-woo), Virtual Asset Industry Rights Act (proposed by Kim Byung-wook), and Virtual Asset Transaction Act (proposed by Yang Kyung-sook)?alternative legislative proposals are also underway.

Among the 11 members of the Legislation Review Subcommittee 1 of the National Assembly’s Political Affairs Committee, to whom the investigative team sent a ‘Legislative Inquiry for Preventing Fraudulent Coin Scams and Protecting Users,’ six members (Kim Hee-gon, Kwon Eun-hee, Min Hyung-bae, Yoon Chang-hyun, Lee Yong-woo, Hong Sung-guk) have proposed legislative alternatives. The Political Affairs Committee’s Legislation Review Subcommittee 1 is a standing subcommittee that reviews laws related to cryptocurrencies and virtual assets. The Political Affairs Committee plans to hold a plenary session on the 1st of next month to submit related bills and begin review in the subcommittee.

Democratic Party lawmaker Min Hyung-bae stated that he is preparing the ‘Act on the Promotion of the Digital Asset Industry and User Protection’ to prevent ‘fraudulent coin scams.’ This law defines cryptocurrencies as ‘digital assets’ and comprehensively covers not only regulation but also industry promotion. In particular, to protect users, it stipulates the basic obligations of digital asset operators to prevent fraudulent coin scams. Min said, “The bill also includes provisions to establish a technical evaluation agency to enable objective technical verification and evaluation of ‘digital asset issuers.’” This is intended to prevent damages such as false disclosures, which accounted for 17.1% in the survey of 316 cryptocurrency scam victims conducted by this publication. Additionally, the bill plans to assign roles to the Financial Services Commission and the Ministry of Science and ICT to support the promotion of the digital asset industry and the registration of digital asset operators.

Yoon Chang-hyun, a member of the People Power Party, is attending and questioning at the National Assembly's Political Affairs Committee's audit of the Anti-Corruption and Civil Rights Commission held on the 15th. Photo by Yoon Dong-ju doso7@

People Power Party lawmaker Yoon Chang-hyun, who raised the issue of ‘withdrawal bans’ on fraudulent coins such as Bitsonic, said, “While I agree on the need for system improvements, careful and thorough regulation of cryptocurrencies is necessary, considering global regulatory trends and market conditions.” Regarding the survey result that more than half (54.7%) of scam victims were unaware that cryptocurrencies are not defined as financial assets and thus do not receive investor protection, Yoon stated, “The law must first conduct an accurate analysis of the commonalities and differences between (cryptocurrencies and) financial assets, and it is important to properly handle preliminary tasks such as coin listing reviews.” As the secretary of the People Power Party’s Virtual Asset Special Committee, Yoon said, “We will prepare the industry-specific law more cautiously and get ready to propose it.”

Democratic Party lawmaker Hong Sung-guk expressed the opinion that “Central Bank Digital Currency (CBDC) needs to be introduced promptly.” CBDC is ‘digital cash’ issued by the central bank based on blockchain technology. The value of CBDC is guaranteed by the central bank. Therefore, unlike private cryptocurrencies such as Bitcoin, its price does not fluctuate and maintains a stable value. Regarding the rapid increase in cryptocurrency scams, Hong stated, “It is necessary for the bill to be passed quickly and for prompt system establishment. Along with the currently proposed bills by Lee Yong-woo, Kim Byung-wook, and Yang Kyung-sook, more active discussions on regulation and market order establishment are needed.”

[Image source=Yonhap News]

People Party lawmaker Kwon Eun-hee mentioned that she is preparing to propose the ‘Act on Virtual Asset Transactions and User Protection,’ which strengthens investor protection measures such as mandatory disclosure of exchange information. According to this bill, if the Prosecutor General, Commissioner of the National Police Agency, Commissioner of the National Tax Service, or Financial Supervisory Service Director confirms criminal acts related to fraudulent coins, they may request the Financial Services Commission Chairman to suspend the relevant transactions. The bill also requires exchanges to preserve transaction records for five years and obliges them to submit records upon request by the Financial Services Commission and the Financial Supervisory Service. It specifies the obligation for cryptocurrency exchanges to disclose information, including their business methods, financial status, and management conditions.

Democratic Party lawmaker Lee Yong-woo, who led the proposal of the Virtual Asset Industry Act last month, said, “The core is to assign ‘roles that exchanges must fulfill’ through whitepaper issuance, segregated custody, and Financial Services Commission approval.” He explained, “Posting a whitepaper means ‘informing what the item (coin) you intend to issue is,’ and segregated custody is something that exchanges must properly do to prevent ‘exit scams.’” Reflecting the recent environment of persistent ‘fraudulent coin’ scams in the altcoin market, the bill also includes provisions on Financial Services Commission approval and penalties for market manipulation. Currently, Lee’s bill is under discussion through party-government consultations within the Democratic Party’s Virtual Asset Special Committee.

Sung Il-jong, Chairman of the Legislative Review Subcommittee of the Political Affairs Committee, is presiding over the meeting of the 2nd Legislative Review Subcommittee of the Political Affairs Committee related to the Conflict Prevention Act held at the National Assembly on the 13th. Photo by Yoon Dong-joo doso7@

People Power Party lawmaker Sung Il-jong, who chairs the Virtual Asset Special Committee, also proposed legislative alternatives. Sung said, “We will draft a bill aimed at reducing exchange operation risks and establishing a systematic system to enhance transparency in coin listing and delisting,” adding, “It is important to bring the cryptocurrency market into the light, improve transparency, and ensure the market operates more fairly.” Sung diagnosed that the government’s failure to provide basic guidelines for cryptocurrencies in a ‘lawless’ environment has led to a surge in scam incidents producing victims. He said, “Although the amendment to the Act on Reporting and Using Specified Financial Transaction Information (Special Financial Transactions Act) was implemented in March, many point out that investors remain in blind spots because banks oversee consumer protection,” and added, “We will create a bill that can develop the cryptocurrency industry and establish a systematic system to enhance transparency in cryptocurrency listing and delisting.”

Additionally, several anonymous members of the Political Affairs Committee’s Legislation Review Subcommittee 1 stated, “It is necessary to define the cryptocurrency and virtual asset industries accurately and simultaneously revise regulatory provisions related to unfair trading practices and user damage remedies in individual laws.” Another committee member said, “Including both ‘regulation’ and ‘industry promotion’ in one bill inevitably leads to conflicts in content. Rather than including everything under the Political Affairs Committee’s jurisdiction, it is more efficient to delegate ‘blockchain industry promotion’ to the Industry, Trade, Small and Medium Enterprises Committee (Ministry of SMEs and Startups) or the Science, Technology, Information and Communications Committee (Ministry of Science and ICT) so that market regulation (brake) and promotion (accelerator) can check and balance each other.”